NCSoft seeks new revenue streams, sans founder Kim

NCSoft forms task force committee of top executives to find new revenue streams without founder Kim Taek-jin, reflecting the company's need for reform.

NCSoft's founder and CEO Kim Taek-jin introduces Lineage 2M at a press showcase in September 2019. [NCSOFT]

NCSoft recently formed a task force committee consisting of its top six executives to find a new revenue stream without its founder Kim Taek-jin, reflecting the local game publisher's dire need for reform.

What rouses interest from the IT industry is that this committee does not include its founder — who also juggles the positions of CEO and Chief Creative Officer — someone who is pretty much part of all core projects within the company.

Kim Taek-jin’s move starkly contrasts with that of other tech firm founders such as Naver’s Lee Hae-jin or Kakao’s Kim Beom-su, both of whom who stepped down from their CEO positions to be active as board members or focus on attracting foreign investments.

“If Kim headed the committee, then NCSoft would not have been free from criticism about what made this team different from other teams formed for similar purposes,” said an anonymous insider from the game industry. “This move is a direct testament to the fact that NCSoft is in dire need of a change.”

NCSoft announced that the committee “was established on Thursday find new projects that could strengthen the game company’s competitive edge and carry them out in action.”

The team is headed by Chief Operating Officer Gu Hyeon-beom. Other executives include Chief Publishing Officer Kim Taek-heon, Chief Information Officer Kim Seong-ryong, Chief Financial Officer Hong Won-jun, Chief of Staff Lee Jae-jun who oversees overall management tasks and Principal Development Management Officer Choi Mun-yeong.

Except for Hong, who joined the company in 2021, the rest of the members have been part of the company for more than 15 years.

NCSoft is suffering from poor earnings and nose-diving shares. In the second quarter, the company’s operating profit plummeted 71 percent on year to 35.3 billion won ($26.24 million) and revenue dropped 30 percent to 440.2 billion won.

Its shares, which once peaked at 1.04 million won in February 2021, closed at 218,500 won on Tuesday, chopped down to one-fifth of its prime figure.

The poor figures derive from a lack of new game releases. The company found new revenue streams in the late 2010s as it moved its primary Lineage franchise from PC to mobile.

Its popular mobile game Lineage M, released in 2017, has accumulated more than 5 trillion won in revenue. Its follow-ups such as Lineage 2M (2019) and Lineage W (2021) became hits as well.

NCSoft's highly-anticipated Massively Multiplayer online roleplaying game (MMORPG) Throne and Liberty is scheduled to be released in December. [NCSOFT]

The Lineage franchise still dominates the rankings for the most lucrative games within the local game industry, but is not doing as well compared to its glorious past, as other game publishers actively pursue the massively multiplayer online role-playing game (MMORPG) market. Multiplying numbers of “Lineage Like” games, which refer to copycat games strongly reminiscent of the Lineage franchise, are also not helping the company.

Red lights are blinking as users grow tired of NCSoft’s excessive usage of the loot box system, which are in-game lucky draws where players may or may not attain valuable items to upgrade their characters. The company’s much-anticipated titles such as Trickster M and Blade & Soul 2, also failed to live up to the expectations.

The new task force committee’s agenda is three-pronged: To revamp organizational management, cut down on costs, and look for new growth factors that the company can latch on to as a means to solidify its competitive standing.

The work environment changed drastically after the Covid-19 pandemic, making it impossible for game companies to enter the so-called “crunch mode,” a time when developers work extra hours for extended period of time for the release of a new game. Advertising expenses for the January-June period were cut down 84.1 percent to 15.9 billion won compared to the same period the year before.

“What’s important in game development is completion speed and game quality,” an NCSoft spokesperson said. “The committee will come up with the best possible way to restructure the company so that new games can be released without delays.”

As the company’s new agenda was unveiled to include cost efficiency and restructuring, workers were quick to react. The number of workers who joined NCSoft’s labor union in one day grew sevenfold compared to average figures.

Although the company clarified that the committee “is not reviewing any artificial restructuring,” Song Ga-ram, the head of NCSoft's labor union, said “the workers are reacting because there may be other methods for the company to reduce the workforce” and added that the union will act appropriately to protect their jobs.

Some wonder if NCSoft will follow in the footsteps of Nexon, which faced similar difficulties in spearheading new game titles. Thus Nexon chose to drastically cut down its workforce for developing games judged not to have much prospect, and instead herded them to games that did.

Next, Nexon formed smaller teams with smaller budgets but gave them more management power to develop the games on their own, so that they could nimbly release new titles without the influence of top-down management. As a result, Nexon is being evaluated to have entered another golden age with hits such as Dungeon Fighter Mobile, Wars of Prasia and Dave the Diver.

“Game companies are bound to have its ups and downs — crises will always come but what’s important is how they respond to them,” said an anonymous insider.

BY PARK MIN-JE [lee.jaelim@joongang.co.kr]